Preliminary PMI data from Europe and Japan for the month of August are in the week ahead of us accompanied by final inflation data from Europe, Canada and Japan as well as New Zealand retail sales for Q2.

USD

CPI for the month of July came in at 1.8% y/y vs 1.7% y/y as expected and up from 1.6% y/y the previous month. Core CPI came in at 2.2% y/y vs 2.1% y/y as expected and previously. With inflation figures rising it will be hard for FED to continue with dovish rhetoric and this should lower the possibility of two rate cuts by the end of the year. Wages tell a different story. Both hourly and weekly earnings came in weaker than previous month. Real average hourly earnings came in at 1.3% y/y while real average weekly earnings came in at 0.8% y/y. Retail sales for the month of July came in at 0.7% m/m vs 0.3% m/m as expected. Control group came in at 1% m/m vs 0.4% m/m as expected announcing strong consumption by US consumers which pushed Atlanta FED’s Q3 projection up to 2.2% from 1.9% previously. Building permits came in at 1336k vs 1270k as expected for a huge jump of 8.4% indicating that lower interest rates will help housing.The White House announced a delay of some new tariffs on Chinese imports from September 1 to December 15. The move is intended to assist US shoppers and support demand for consumer goods ahead of Christmas.

This week we will have housing data, FOMC minutes and Jackson Hole Economic Symposium, gathering of Central Bankers. Leaders of G7 group will meet on Saturday August 24 in France.

Important news for USD:

Wednesday:

Existing Home Sales

FOMC Minutes

Thursday:

Jackson Hole Economic Symposium

Friday:

Jackson Hole Economic Symposium

New Home Sales

Saturday:

G7 Meeting

EUR

ZEW published its survey of current situation in Germany for the month of August and results showed another huger drop, it came in at -13.5 vs -6.3 as expected, down from -1.1 the previous month for a lowest reading since 2010. Economic sentiment was also published and it painted even worse picture coming in at -44.1 vs -28 as expected with -24.5 the previous month for the Germany and -43.6 vs -20.3 for the Euro Area. After 0.4% q/q growth in the Q1 German Q2 GDP came in at -0.1% q/q as expected. Private consumption and business investment improved compared to Q1 but construction activity and falling exports contributed to contraction. Looking ahead, the PMI numbers are not encouraging so the potential for recession in Germany, two quarters of negative GDP, is rising. Markets are pricing about 62% of a 10bps rate cut by ECB at their September meeting.Eurozone’s Q2 GDP came in at 0.2% q/q as the preliminary reading showed. Industrial production for June, included in Q2 GDP, came in at -1.6% m/m down from 0.8% m/m the previous month. It is a sharp drop for the lowest reading in over three years. A drop on the yearly reading to -2.6% y/y vs -1.2% y/y as expected is very concerning. Looking forward into Q3 the problems and weakening conditions are mounting. Trade balance came in at EUR17.9 bn vs EUR18.5 bn as expected down from EUR19.6 bn the previous month on the back of falling exports (-1.2%) and falling imports (-0.8%).

This week we will have final inflation numbers for July and preliminary consumer confidence index as well as preliminary PMI data for the month of August. Italian Senate is set to hold a vote of no-confidence on August 20 with prospects of new elections.

Important news for EUR:

Monday:

CPI

Tuesday:

No-confidence Vote (Italy)

Thursday:

Markit Manufacturing PMI (EU, Germany, France)

Markit Services PMI (EU, Germany, France)

Markit Composite PMI (EU, Germany, France)

Consumer Confidence Index

GBP

The employment report for the month of June showed average weekly earnings coming in at 3.7% 3m/y as expected vs 3.5% 3m/y the previous month. The unemployment rate has ticked higher to 3.9% but the claimant count has dropped to 28k vs 38k the previous month which was revised down to 31.4k. Rise in wages is very encouraging, it should put upward pressures on inflation and although the unemployment rate ticked higher the overall report shows very strong labour market conditions. The name of the game for GBP is Brexit and this report will not have an immediate impact on pound’s strength.

CPI for the month of July came in unchanged vs -0.1 m/m as expected and 2.1% y/y vs 1.9% y/y as expected and up from 2% y/y the previous month. ONS stated that the increase in CPI is due to bigger rises in prices of hotel rooms. Computer games and games consoles rose by 8.4%. They added that they are not seeing any clear evidence that weaker pound is attributing to the rise in consumer prices. Retail sales presented another good data for Q3 coming in at 0.2% m/m vs -0.2% m/m as expected. The rise was led by online sales which jumped 6.9% m/m.

AUD

Employment change for the month of July came in at 41.1k vs 14k as expected. The unemployment rate stayed at 5.2% while participation rate ticked up to 66.1%. Full time employment change came in at 34.5k vs 21.1k the previous month. Headline number is a nice beat and the fact that most of the jobs are full time is a great boost for AUD. Wage price index for Q2 came in at 0.6% q/q vs 0.5% q/q as expected. Rising wages are great news for Australian workers and RBA. Impact of wage rise on inflation is expected. Reports have cut down probability of September rate cut in half.Data from China for the month of July came in much weaker than expected. Industrial production came in at 4.8% y/y vs 6% y/y as expected and down from 6.3% y/y the previous month. This is the slowest growth in industrial production since February of 2012. The main culprit is the contraction in production of cars and related manufacturing parts. Retail sales came in at 7.6% y/y vs 8.6% y/y as expected and down from 9.8% y/y the previous month. Car sales showed the biggest decline (-2.6%) due to a sales boom in previous month caused by clearing old inventories. In order to keep GDP at or above 6% level additional stimulus is needed. Required reserve ratio (RRR) cuts of 50 bps are expected in Q3.

This week we will have RBA meeting minutes from the August meeting.

Important news for AUD:

Tuesday:

RBA Meeting Minutes

NZD

Electronic card spending for the month of July came in at -0.1% m/m vs 0.5% m/m as expected. Due to the fact that electronic card spending attributes around 70% to retail sales we can expect a weaker reading next week. BusinessNZ manufacturing PMI came in at 48.2 vs 51.3 the previous month. This is the first time that index fell below 50 since 2012. Sub-index production came in at 51.1 but new orders dropped to 48.9 and employment continued its three-month decline and came in at a weak 42.6 which is the lowest in a decade.  

This week we will get services PMI, bi-monthly GDT auction and consumption data for Q2 which is forecasted to come in weaker than previous quarter.

Important news for NZD:

Monday:

ServicesNZ PMI

Tuesday:

GDT Price Index

Friday:

Retail Sales

CAD

Existing home sales in July came in at 3.5% m/m vs 3.3% m/m as expected up from -0.2% m/m the previous month. Vancouver was leading the charge with 26.4% rise from the previous month although the average price fell by 5.6%. Still housing prices in Vancouver are by far the highest among major Canadian cities. ADP employment came in at 73.7k vs 30.4k the previous month which got a huge downward revision to -9.6k. All employment categories counted were positive for a strong employment report.

This week we will have data on manufacturing sales, inflation in july, wholesale sales and consumption for the month of June.

Important news for CAD:

Tuesday:

Manufacturing Sales

Wednesday:

CPI

Thursday:

Wholesale Trade

Friday:

Retail Sales

JPY

Corporate goods price index, which is equivalent to PPI in the rest of the World, came in for the month of July at -0.6% y/y vs -0.5% y/y as expected and down from -0.1% y/y the previous month. The reading is lowest since December of 2016. Although CGPI in Japan is not directly linked to CPI the data will be closely monitored by BOJ since the reading is giving deflationary signals. Core machinery orders for the month of June, the proxy for capital expenditure, came in at 13.9% m/m vs -1% m/m as expected and -7.8% m/m the previous month. Although the data is historically very volatile, this is the best monthly reading in history.

This week we will have trade balance data, preliminary PMIs for the month of August as well as national inflation for the month of July.

Important news for JPY:

Monday:

Trade Balance

Exports

Imports

Thursday:

Markit Manufacturing PMI

Markit Services PMI

Markit Composite PMI

Friday:

CPI

CHF

Swiss sight deposits came in at CHF585.5 bn vs CHF 582.7 bn previously. This is a jump of CHF2.8 bn, which is the highest jump in deposits in two years. This jump is interpreted as evidence that the SNB intervened last week to ease the CHF appreciation to new two-year highs against the EUR.

This week we will have trade balance and industrial production data.

Important news for CHF:

Tuesday:

Trade Balance

Exports

Imports

Thursday:

Industrial Production

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